Page 559 - SAIT Compendium 2016 Volume2

IN 63 (2) Income Tax acT: InTeRPReTaTIon noTes IN 63 (2) (4A) If the amount translated in accordance with subsection (4) includes a number of cents that is less than one rand,
that amount must be rounded off to the nearestrand.
Section 6quin – Rebate in respect of foreign taxes on income from source within Republic (4) For the purposes of subsection (2)(a)(ii) and (b)(ii), the amount of anytax—
(a) levied and withheld as contemplated in subsection (1)(a); or (b) imposed as contemplated in subsection (1)(b),
must be translated to the currency of the Republic on the last day of the year of assessment in which that tax is so levied and withheld or imposed, by applying the average exchange rate for that year of assessment.
Section 9A – Blocked foreign funds
(1) Where any amount, or any portion of any amount, received by or accrued to any person which is required to be included in the income of that person during any year of assessment may not be remitted to the Republic during that year as a result of currency or other restrictions or limitations imposed in terms of the laws of the country where the amount arose, that person shall be allowed to deduct from his or her income for that year an amount equal to so much of the amount or portion which may not be remitted as is required to be included in the income of that person for that year.
(2) The amount or portion which may not be remitted during the year of assessment contemplated in subsection (1) shall be deemed to be an amount received by or accrued to the person contemplated in that subsection in the following year of assessment.
(3) Where any amount, or any portion of any amount, of the net income of a controlled foreign company in respect of a foreign tax year of the controlled foreign company may not be remitted to the Republic for the reasons contemplated in subsection (1), there shall be allowed to be deducted from the net income of the controlled foreign company for that foreign tax year an amount equal to so much of the amount or portion which may not be remitted.
(4) The amount or portion which may not be remitted as contemplated in subsection (3) shall be deemed to be an amount received by or accrued to the controlled foreign company contemplated in that subsection in the following foreign tax year of the controlled foreign company.
Section 9D – Net income of controlled foreign companies
(6) The net income of a controlled foreign company in respect of a foreign tax year shall be determined in the functional currency of that controlled foreign company and shall, for purposes of determining the amount to be included in the income of any resident during any year of assessment under the provisions of this section, be translated to the currency of the Republic by applying the average exchange rate for that foreign tax year: Provided that any exchange item denominated in any currency other than the functional currency of that controlled foreign company shall be deemed not to be attributable to any permanent establishment of the controlled foreign company if the functional currency is the currency of a country which has an of cial rate of in ation of 100 per cent or more for that foreign tax year.
Section 12Q – Exemption of income in respect of ships used in international shipping
(1) For the purposes of this section—
‘international shipping’ means the conveyance for compensation of passengers or goods by means of the operation of a South African ship mainly engaged in international traf c;
‘international shipping company’ means a company that is a resident that holds a share or shares in one or more South African ships that are utilised in international shipping;
Section 25D – Determination of taxable income in foreign currency
(1) Subject to subsections (2), (3) and (4), any amount received by or accrued to, or expenditure or loss incurred by, a person during any year of assessment in any currency other than the currency of the Republic must be translated to the currency of the Republic by applying the spot rate on the date on which that amount was so received or accrued or expenditure or loss was so incurred.
(2) Any amounts received by or accrued to, or expenditure incurred by, a person in any currency other than the currency of the Republic which are attributable to a permanent establishment of that person outside the Republic must be determined in the functional currency of that permanent establishment (other than the currency of any country in the common monetary area) and be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
(2A) Subsection (2) shall not apply to the extent that—
(a) the other currency contemplated in that subsection is not the functional currency of that permanent establishment;
and
(b) the functional currency is the currency of a country which has an of cial rate of in ation of 100 per cent or more
throughout the relevant year ofassessment.
(3) Notwithstanding subsection (1), a natural person or a trust (other than a trust which carries on any trade) may
elect that all amounts received by or accrued to, or expenditure or losses incurred by that person or trust in any currency other than the currency of the Republic, be translated to the currency of the Republic by applying the average exchange rate for the relevant year of assessment.
(4) Where, during any year of assessment— (a) any amount—
saIT comPendIum oF Tax LegIsLaTIon VoLume 2 551